Tale of Two Markets?


Ok well my tiny little Nuance (NUAN) experiment didn’t work (if I had sold before the close it would have!) but I won’t complain too much because it was the right way in my mind to play the idea without much capital risk.

Anyway, on to the markets as a whole. Let’s run down the usual suspects:

Cisco, Intel, IBM, and Microsoft were all rather flattish with Microsoft crawling to a 52 week high and the others slightly above or below no change. Interestingly, Cisco announced a dividend boost and decent quarterly earnings but their outlook wasn’t enough to excite people. Not like some other companies.

Some of the hot stocks on growth stock buyers’ lists have responded well to good reports. Buffalo Wild Wings being one such example with that stock launching over 10% on its earnings news (and still climbing).  A few other hotshots launched as well.

It seems that if you’re in the good graces of the market, your stock will explode up on a good report. Nuance would have launched had their report been good (it began ramping up before the close breaking resistance into the news). If your company reports mediocre  or bad results (and you’re not a large 3-letter tech company) , your stock likely gets blasted down.

Bonds have definitely weakened as there have been a couple of technically very weak days recently in the TLT and TIP ETF’s. TIP tried to reverse up and managed to stay close enough to the 200 day MA not to trigger more selling but that chart action is cause for concern in my book. Of course if something bad happened macroeconomically, that will probably reverse up.

The MLP’s have been level and the large cap non-tech dividend payers have been behaving well. JNJ eased today but is pushing higher. Altria gained 1.6% and Walmart edged up. The phone companies AT&T and Verizon were unchanged. Remember, I look to the large US dividend payers, the MLP’s and bonds to see if a bid is returning to a US yield+safety trade. Bonds aren’t showing it but the large caps are looking strong.

Precious metals were relatively unchanged and remain that way in the global markets. Something to watch – the VIX (volatility index) rose almost 5% today meaning wariness of risk peeked its head up. This is the precursor to a change in a calm upward movement such as we’ve had this past 5 weeks.

Commodities – the agricultural commodities are mostly down with cotton and coffee getting slapped and cocoa getting a biff shot too. The big foodstuffs – corn, soybean, rice and wheat were slightly down. Natural gas is an interesting beast as it almost hit “free” on the quote board a few days ago but has moved up a few days in a row now. Companies are cutting production due to low prices (low prices cures the problem of low prices).

What I’m watching – I’ll be watching the VIX, US government bonds, the large caps and the high flyers.

At the time of this writing, I or my clients own the following investments mentioned in this column: MO, AMLP, Gold, NUAN calls, TIP, VZ, AT&T

Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page